CALGARY – Cenovus Energy Inc. is throttling back spending and focusing on developing a backlog of oil projects as it looks to get a handle on rising operating costs and boost cash flow.

The Calgary-based independent oil sands producer on Thursday cut planned capital spending for 2014 to between $2.8-billion and $3.1-billion, down 13% compared to a year ago.

Like other oil sands players, Cenovus has been grappling with operating costs that have begun to edge up across the sector.

On Thursday, it said operating costs at its flagship Foster Creek project, a joint venture with ConocoPhillips Co., would rise 7% next year to average $16 to $17.40 per barrel on higher fuel and start-up costs associated with a new production phase.

In the third-quarter, costs at the steam-driven project jumped 49% from a year earlier on lower production volumes and a higher steam-to-oil ratio.

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“We have not been happy with the trend in operating costs in recent quarters, and we are focused on making changes in 2014 that we expect will lead to sustained cost reductions moving forward,” chief executive Brian Ferguson told analysts.

Cenovus expects oil production to increase 10% to average between 190,000 and 208,000 barrels per day in 2014.

The company is shifting spending away from emerging assets toward developing an inventory of approved projects, Mr. Ferguson said.

Its 2014 budget includes a 40% cut to planned spending on emerging oil sands assets from a year earlier, Cenovus said. Spending at the company’s flagship Christina Lake project is forecast to rise by 15%, while spending at its Foster Creek property will fall by 12%. Cash flow is expected to hit $3-billion or $3.95 per share at the low end, the company forecasts, down 8% from a year ago.

Mr. Ferguson said Cenovus expects to receive regulatory approval for its Grand Rapids development and the first phase of its Telephone Lake project by the middle of next year.

Including those projects, the company has as much as 460,000 barrels per day of new oil sands production “in the hopper ready to begin investment on,” he said.

“We’re now focusing on developing the portfolio over the next four- to five-year period” to boost cash flow and grow the dividend, he said.

The emphasis on production growth comes with fears of wage inflation and labour shortages beginning to percolate in Western Canada.

Major energy companies are eyeing a new round of growth projects in the oil sands and plans for liquefied natural gas terminals are starting to take shape on the British Columbia coast.

Cenovus expects to dodge those concerns, however, because it employs smaller teams of tradespeople compared to the gas mega-projects and because it operates its own module yard south of Edmonton, said John Brannan, executive vice-president and chief operating officer.

The company said it has centralized drilling operations so the same teams work on multiple assets. It is also looking to cut costs from its supply chain, reducing the number of new hires and reallocating staff to support projects anticipated to add production growth in next four years, it said.